The International Monetary Fund (IMF) has announced that it has approved a financing agreement worth US$470 million (445 million euros) with Mozambique, reported Reuters.
During a press conference called after the agreement was approved on Monday by the IMF board of directors, Mozambique’s economy and finance minister, Max Tonela, said the agreement is the beginning of a new phase towards the resumption of sustainable growth of the country’s economy.
The IMF will disburse the $470 million fund for the implementation of an Extended Fund Program until 2025, to support the country to ensure sustainability, inclusive growth, and long-term macroeconomic stability.
“The decision taken on Monday by the IMF board of directors represents an important milestone in Mozambique’s relations with the international financial market, signaling good prospects for our development process,” said Mr. Tonela.
This is the first time that the IMF has approved the funding for Mozambique since the disclosure of the so-called scandal of hidden debts in 2016, with only occasional financial aid following specific disasters, such as the Covid-19 pandemic or cyclones Kenneth and Idai, in 2019.
Alexis Mayer-Cirkel, the IMF’s representative in Mozambique, said that the aim is to support a set of government reforms aimed at ensuring economic recovery, highlighting the importance of the public finance management sectors.
The IMF official said the financial aid program helps in the recovery in the sense of facilitating and creating space for the budget to be able to sustain in the face of fiscal pressures, derived from the various shocks that we are all experiencing in the world. He added that the grace period for the debt is 10 years and repayment is long term.
During the negotiations, the financial organization advocated a series of tax and VAT policy reforms, as well as the creation of a sovereign wealth fund for revenues from mineral resources.
